Ireland, alongside Luxembourg, remains at the forefront of facilitating the distribution of ESG funds, with a significant portion of assets under management (AUM) allocated to sustainability focused products.
Notably, 33% of funds domiciled in Ireland and Luxembourg are classified under SFDR as Article 8 (so-called ‘light green’ funds – see box) or Article 9. This is an increase from just 20% in 2022.
The figure comes from Maples Group, a law firm that recently published the ‘Maples Group SFDR Impact Analysis 2025’ – a review of more than 27,000 funds across the EU’s two major fund domiciles: Ireland and Luxembourg.
According to the report, 33% of all Irish and Luxembourg-domiciled funds – over 9,000 in total – are now classified as sustainability-focused.
Ireland’s Growth in Sustainable AUM
The report underscores Ireland’s prominence in sustainable investment, particularly given its close alignment with Luxembourg in terms of fund classifications and growth. With a total AUM of approximately €5.6 trillion in Article 8 and 9 funds across the two jurisdictions, Ireland has emerged as a key player in ESG investment.
A strong emphasis on sustainable finance has driven fund managers with funds domiciled in Ireland to adopt ESG strategies, proving that demand remains robust despite the higher profile for anti-ESG sentiment, and despite tighter regulatory scrutiny of the sector that has increased ‘greenwashing risk’ for fund promoters.
For asset levels to have grown, to now exceed €6 trillion, is truly remarkable and demonstrates not only the resilience of this sector but the continuing demand for sustainable products from European investors
The fact that 54% of all new funds launched in Europe in 2024 were classified as sustainability-focused is seen as evidence for continued demand for green finance. Ian Conlon, funds and investment management partner and European lead of the sustainable investing group at Maples, said: “2024 was undoubtedly a challenging year for the sustainability space. Growing anti-ESG sentiment could have stifled the flow of capital towards sustainable funds.
“For asset levels to have grown, to now exceed €6 trillion, is truly remarkable and demonstrates not only the resilience of this sector but the continuing demand for sustainable products from European investors.”
Conlon co-authored the report along with Michelle Barry and Richard O’Donoghue.
SFDR and fundraising
The Maples analysis points out that asset managers looking to market their funds in Europe cannot ignore SFDR when looking to raise funds. Ireland, with its well-established financial infrastructure, has long-since proven attractive for managers from overseas, significantly the US.
Interestingly, the divergence between US and European regulatory approaches has led US asset managers to tailor their ESG offerings for the European market, say the report’s authors. Over 23% (€1.8 trillion) of sustainability-focused funds domiciled in Ireland and Luxembourg are managed by US firms.
While SFDR compliance presents challenges for international managers, Ireland has positioned itself as a solution-oriented jurisdiction, offering expertise in regulatory advisory and fund structuring to help firms navigate the complexity around ESG compliance.
ManCos under scrutiny
An important takeaway from the report is the heightened regulatory scrutiny on management companies – commonly known as “ManCos”, which are the regulated entities that sit behind a fund. In particular, this relates to their compliance with SFDR.
Maples’ report highlights examples of regulatory fines imposed on ManCos in Luxembourg and Denmark for operational deficiencies, including failure to verify sustainability commitments and weak internal oversight mechanisms. Given Ireland’s parallel regulatory framework, ManCos domiciled in Dublin will likely face increased supervision to ensure alignment with EU sustainability disclosure requirements.
ManCos operating within Ireland and elsewhere must prioritise strong ESG governance, ensuring they have clear policies, procedures, and personnel dedicated to sustainability oversight to avoid compliance risks and reputational damage.
The future: SFDR 2.0
One of the most significant takeaways from the Maples Group SFDR analysis is the potential overhaul of SFDR into a product labelling regime. Ireland must prepare for SFDR 2.0, which proposes new categorisation frameworks such as ‘Sustainable’, ‘Transition’, and ‘ESG Collection’, funds.
The introduction of explicit fund labels presents both opportunities and challenges for Ireland’s asset managers. While clearer classifications could help attract institutional investors seeking transparency, Irish firms must carefully evaluate how their existing Article 8 and 9 funds will transition into the new framework.
Additionally, Ireland-based Ucits distributors must adapt to evolving MiFID sustainability preferences, ensuring they align their fund offerings with investors’ ESG expectations under the new SFDR proposals. Given Ireland’s expertise in fund structuring, its regulatory agility will be crucial in navigating these transitions and maintaining investor confidence.
Ireland’s influence within the SFDR framework continues to grow, cementing its status as a top European jurisdiction for sustainable finance. With significant AUM in Article 8 and 9 funds, robust fundraising activity, and strategic positioning for SFDR 2.0, Ireland stands at the epicenter of ESG integration in Europe.
However, ManCos must strengthen internal processes, US fund managers must navigate regulatory divergence, and Ireland’s fund-service providers must prepare for potential SFDR reforms to ensure long-term success.
Light green, dark greenArticle 8 funds, often referred to as “light green” funds, promote environmental and social characteristics but do not have sustainability as their core objective. These funds include ESG factors in their investment decisions, though they may still invest in companies without high sustainability standards. In contrast, Article 9 funds, or “dark green” funds, aim for sustainable investments as a primary objective, targeting measurable environmental or social outcomes. |
